I do not own this stock of IBI Group Inc (TSX-IBG, OTC-IBIBF). I have had this stock on my list to investigate for some time before I finally did in 2011. What finally prompted me set up a spreadsheet on this stock was an investment report I read in March of 2011.
When I was updating my spreadsheet, I noticed that there is a problem with Revenue. The increase in Revenue is not bad at 3.75% and 3.08% per year over the past 5 and 10 years. However, the Revenue per Share has been decreasing at 0.81% and 5.64% per year over the past 5 and 10 years. This is because the outstanding shares have been increasing at 4.60% and 9.24% per year over the past 5 and 10 years.
The analysts have been inconsistent in predicting the growth in Revenue. Estimates were during the year when I did my review and actual is what was actually reported when year-end results were published. In the chart below you can see what the estimates were each year from 2018. November 2020, analyst gave an estimate for 2020 of $426M, but the revenue came in lower at $393M. This year, analysts think that the Revenue will be $436 for the 2021 year end. The 12 month Revenue to the end of the second quarter is $422. So, they may be right.
| Estimates | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|---|
| 2018 | $362 | $378 | $385 | |||
| 2019 | $377 | $386 | ||||
| 2020 | $426 | $411 | $403 | |||
| 2021 | $436 | $452 | $470 | |||
| Actuals | $368 | $377 | $393 | $422 |
Currently no dividends are being paid. This company was an Income Fund and changed to a corporation in January 2011. Dividends were paid to 2013 and then suspended. They had not got the Dividend Payout Ratios for EPS under control. They also had a couple of years of EPS losses around 2013.
Recently they have been doing better. Revenues have been growing, but Revenue Per Share has been declining. This is because outstanding shares have been increasing. EPS is growing but are volatile. Shareholders who have had this stock for 15 and 16 years only made money from dividends.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2020 is low and good at 0.17. The Liquidity Ratio for 2020 is 1.39. If you add in Cash Flow after dividends, it is good at 1.69. The Debt Ratio is quite low at 1.24. I prefer this to be at 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 5.19 and 4.19. I prefer these to be below 3.00 and below 2.00.
The Total Return per year is shown below for years of 5 to 16 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 0.00% | 29.95% | 29.95% | 0.00% |
| 2010 | 10 | 0.00% | -2.91% | -4.88% | 1.97% |
| 2005 | 15 | 0.00% | 7.79% | -1.29% | 9.08% |
| 2004 | 16 | 0.00% | 6.44% | -1.96% | 8.41% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.67, 11.79 and 17.64. The corresponding 10 year ratios are 6.43, 11.34 and 14.88. The corresponding historical ratios are 6.93, 10.89 and 14.33. The current P/E Ratio is 17.93 based on a stock price of $12.55 and EPS estimate for 2021 of $0.70. The current P/E Ratio is above the high median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $5.58. The 10 year low, median, and high median Price/Graham Price Ratios are 0.84, 1.29 and 1.83. The current P/GP Ratio is 2.25 based on a stock price of $12.55. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 2.47. The current P/B Ratio is 6.35 based on a stock price of $12.55, Book Value of $61.83M and Book Value per Share of $1.98. The current P/B Ratio is 157% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 3.14. The current P/CF Ratio is 9.37 based on as stock price of $12.55, Cash Flow per Share estimate for 2021 of $1.34, and Cash Flow of $41.9M. The current ratio is 180% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I cannot do any dividend yield testing as the dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio is 0.24. The current P/S Ratio is 0.90 based on Revenue estimate for 2021 of $436M, Revenue per Share of $13.95 and a stock price of 12.55. The current ratio is 113% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is this stock is probably current expensive. The P/S Ratio test says this. Plus, all the other tests say the same thing.
I look at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/E Ratios for good returns are lower than today. This is the same with P/S Ratio. Since dividends are suspended, we can not really judge using dividend yield.
In the following chart the total return for the 10 years to December 31, 2020 is -4.88% per year. The beginning yield was at 11.84%, and the P/E Ratio and the P/S Ratio were at 12.17 and 0.51. Does this chart change my opinion of the stock price? No really. Relatively speaking the P/E Ratio and P/S Ratio are currently high.
| # Years | Total Ret | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|
| 5 | 29.95% | 5.39 | 0.17 | 0.00% |
| 10 | -4.88% | 12.17 | 0.60 | 11.84% |
| 15 | 7.79% | 13.21 | 0.51 | 11.31% |
| 16 | 6.44% | -227.73 | 0.61 | 10.00% |
| current | 17.93 | 0.90 | 0.00% |
Is it a good company at a reasonable price? The stock price appears to be on the expensive side. This would be a risky investment. The company had problems in 2012 and 2013 and the recovery has been uneven. A good signal of confidence would be a restart to dividends. The economic recovery from the 2008 bear and been long and slow and it has adversely affected a number of companies.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (6). The Consensus would be a Strong Buy. The 12 month stock price is $14.75. This implies a total return of 17.53% all from Capital Gains based on a current stock price of $12.55.
Last year when I looked at analysts’ recommendations, I found Strong Buy (2) and Buy (5). The consensus would be a Strong Buy. The 12 month stock price was $9.04. That implied a total return of 22.33% all from capital gains based on a stock price of $7.39. What happened was a stock price 1 year later of $12.55 from $7.39 for a total return of 69.82% all from capital gains. I said that the stock price was relatively expensive last year.
There are few entries, but the last two on Stock Chase say the stock is a Buy. Recently Adam Othman on Motley Fool suggested this company as a small cap to buy. The Executive Summary on Simply Wall Street gave this stock 4 stars out of 5 and listed two risks. A writer on Simply Wall Street thinks now may not be the time to buy this stock as it is selling currently at its fair value. A writer on Simply Wall Street talks about who owns shares in this company. The company talks about its third quarterly results on Globe Newswire.
IBI Group Inc is a Canada-based engineering services provider. The company plans, designs, implements, as well as offers other consulting services and software development for its intelligence, buildings, and infrastructure business segments. Its geographical segments are Canada, the United States, United Kingdom, and other International. Its web site is here IBI Group Inc.
The last stock I wrote about was about was Johnson and Johnson (NYSE-JNJ) ... learn more. The next stock I will write about will be PFB Corp (TSX-PFB, OTC-PFBOF) ... learn more on Monday, November 8, 2021 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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